Thursday, January 28, 2010

Can Malaysia Achieve 8% Growth?

Can Malaysia register a robust 8% growth in the next decade to achieve the status of a fully developed nation?

In the Government Transformation Programme (GTP) Roadmap released here today, it said there were challenges for Malaysian economy to grow by eight per cent per year until 2020 as the growth has slowed after the Asian economic crisis in 1997.

Malaysia’s growth rate has almost halved since the crisis, down from an average of about nine per cent per annum in 1991-1997 to an average of 5.5 per cent per annum in 2000-2008.

The compound annual growth rate of foreign direct investment into Malaysia from 2000 to 2007 was only one per cent, compared to 30 per cent for India, 12 per cent for Vietnam and 10 per cent for China.

The lower annual growth rate of FDI points to a number of factors; chiefly, a failure of the government to reduce its red-tape and enhance its efficiency and a lack of focus and positive results from its strategic plans.

Immediately after the 1997 Asian financial crisis, the government was aware of the inherent economic bottlenecks and growing competitiveness from emerging regional economies. The past administrations had merely responded with more slogans and nothing concrete.

In the last few years of Dr Mahathir administration, he had tried to introduce several reforms such as the use of English to teach Maths and Science in an attempt to broaden the use of English in Malaysia. Ironically, it was his regime's own language policy which had destroyed a good English education foundation inherited from the Bristish.

Mahathir had tried, with limited success, to enhance the efficiency of the civil service his efficiency programmes e.g. 'Bersih, Cekap & Amanah' etc.

His successor, Abdullah Badawi, vowed to work on enhancing the nation's soft skills or software but lost his focus almost immediately after his memorable speech at an Oxbridge dinner. For most of his term, Abdullah had wasted more time trying to promote and market his Islamic credentials, Islam Hadhari, without much success.

Najib is now trying to fix the obvious, a mediocre economy, lacklustre FDI growth, middle income trap and a deteriorating fiscal position.

He has introduced his own version of Government Transformation Programme (GTP). Like previous programmes announced by his predecessors, Najib's grand reform plan is going to face the same barriers; a lethargic civil service, a lack of capable implementers and a challenge to change the culture and work ethnics of public servants in the country.

Worse, the civil service has been grossly politicized by the government. Public institutions have lost the remaining shred of their credibility in the last 20 months over a number of issues and their involvement in political contestation between Barisan and Pakatan.

Does the government have enough political will to push the reform plan through the civil service? Or does it fear a lost of support from the more than 1.5 million strong civil servants?

According to the Roadmap, there was also an urgent need for the government to reduce spending as the country was in a fiscally-challenging position. It said Malaysia’s ability to finance improvements in its performance was limited, given that the country’s fiscal position has been worsening since 1997.

“We face a dilemma. There is an urgent need to reduce spending and yet deliver big economic and social outcomes fast.

Predictably, with the number of corrupt cases sprouting out from everywhere there are many more 'older cases' which were not disclosed or buried. Experts had put a lost of more than USD 200 billion to corruption in the last decade.

Ironically, Dr Mahathir had questioned the whereabouts of RM250 billion gained from oil and gas revenue in the last 6 years.

Without accountability, change in the political culture, positive reform to the education system, a strong political will to curb corruption and an emphasis on quality and innovation, it will be difficult for Malaysia to hope growing at 8% annually.

Simply, where is the growth going to come from?

What else is attractive in Malaysia?

For a start, there is a lack of goodwill factors in the country. The international news we had created for ourselves in the last 12 months were mainly disastrous and these negative coverage e.g. Allah squabble, power grab in Perak, PKFZ scandal, Kartika's case, Teoh Beng Hock death and others would not contribute positively to our international image and attractiveness as a FDI destination.

Can Najib deliver?

To achieve an average annual growth of 8%, political parties need to put their crave for power as secondary and work together to pull this country out from its decline. The road to Putrajaya must not be the only path.

8% my foot! Hahaha, that's right have to agree with Footmen! ....unless, yes unless Najib consult his 'si-fu' Awtar director/producer of "Sodomy 1". Together they may be able to stage it what! But then and again, the days of bullshitting the Malaysian public with their unintelligible garbage is over.

Sorry to be cynical - 8%. Ha, wait long-long. But we can still declare M'sia DEVELOPED at 2020 like the "dentist" did to Selangor.

M'sia is really STUCK. Thanks to Dr. M, our institutions and systems are in really bad shape. Just look at our education system - just sigh (UM used to be one of BEST in Asia in the 60s, now what?)

I REALLY hope Najib can deliver BUT my heart tells me it's all rhetoric...look at what happen over the past few weeks on the sensitive religious issues (our PM should have taken a more SOLID stand and prove he is the LEADER).

Where are we going to get annual growth 8%...scratch my head, toes, etc... also cannot find, how leh???

EDUCATION is key but it is too late for 2020. We have wasted a generation or two with our sub-par education system. SIGH...

mr. PM, change the mindset of all the politicians(including you) and the public servants, who are always behaved like school boys/girls, perhaps worst, before you could change anything else. YOU AND YOUR BUDDIES SHOULD SEE FAR AND LOOK BROAD BEFORE YOU IMPLEMENT OF ALL YOUR MUMBO JUMBO MEASUREMENT SHITS! DO THE NESSARRY FIRST AND CHANGE ALL YOUR SHIT GLUED BRAINS!

The country will not be able to be fully developed if the leaders are of the third-class intelligence, questionable integrity and corrupt. The civil service must be filled with motivated, smart and ethical people. Given what we have now, we will have to wait until the cows come home before Malaysia will become fully developed.

Why are we in such situation today is mainly due to this Mamaktir fler.During his time,he go and quarrel with everybody especially the west and USA and also Australia.Talk as if he is smarter than them.Never be humble but always want to fight on.Eh!people also got their pride and Malaysia economy to them is nothing.Recently,this fler again showing his fighting cockness by accusing USA of staging the 911 attack.

The magical figure of 8% was spouted by then PM Mahathir in the go go mid 90's when FDIs were pouring in and our immediate neighbors Thailand, Indonesia and Vietnam were just starting to wise up.

Now they have the FDIs and we still have Mahathir, xPM no doubt, but still as viciously divisive and corrosive as ever. Guess who can achieve or surpass 8% growth till 2020. My money is not on Malaysia.

Najib seems to be day-dreaming. He is surely in a dreamland totally oblivious to the negative developments which are boulders on his economic recovery path.While he speaks civil servants are issuing threats and calling for another May 13. Now they have brought it forward to Feb 13.

>Anonymous said... >Malaysia will be lucky to achieve 3 to 4% growth at best.>7:42 PM 1/28/2010

This is about right, given the opacity of the govt. This cookery has been repeating for 22 years or more when civil servants(slaves) cook the books into rosy annual financial/budget reports. The oil well is the "buffer" to up the "growth". This "book value" is switched back at midterm reviews to read the real value.

Tan Cairong said ...During the pre-Merdeka days, Malaya had the highest per capita income in Asia. Japan's economy was devastated by the war. Oil was then less than a dollar a barrel. Rubber and tin were pushed to all time high by the Korean war. Some may remember hawkers can send their children to Taiwan for university as our ringgit was so strong. People go to Singapore for shopping because things were so cheap there. We were already on top even before oil and gas were discovered in large scale. Now 2 generations later, we now rank below not only Japan, S Korea, Taiwan, Hongkong, Singapore and Brunei, the others, China, Vietnam, Thailand are fast catching up. Singaporeans now come to JB for shopping. Soon Thai men will be coming over the border for fun just like ours now go to Hatyai.

How did others beat us? Talents. Singapore beat us using our talents. At one time over half their cabinet were Malaysian born. Malaysians ran their award winning air line, university departments, even their arm forces had many Malaysians. Till today Singapore continue to import talents. They will die like us if they don't. Taiwan and Korea did it by bringing back their highly educated talents from the West during the 80s and 90s. The same is now happening in China and India. China has the largest number to young people studying in the West.

We had our chance. We were at the zenith and lost our place. Just like Britain was the top world power during the industrial revolution. Britain never got back on top. Similarly, it's not possible to regain our preeminence. Our main resources; oil and gas is near the end of life, our lead position in palm oil will be taken over by Indonesia, as already happen with rubber production.

Our main hope is our talent pool. It has been depleted, and is continuing to be drained. Our political position is simply incompatible with the hard action demanded by the need for economic progress. The political humiliation needed to address the position is simply beyond acceptable. With the demographic trend, the situation can only get worst. We need a leader with the stature like Ding Xioping who accepted defeat and had the courage to slaughter the holy cow of communism and replaced it with free market.

The question is not when we can achieve developed status, but when we are going to be another Zimbabwe. As things are going, we are more likely to end up as another Zimbabwe by 2020, or as some politicians said, we have already arrived.

Have you guys ever heard our YBs in parliment talk about economy for the past few years?We only heard about period,skirt length,girls cannot wear what,ketuanan,jokes and more jokes...so how to compete with those economic-minded countries?Also,endless calls asking those who dont like it get out of the country .

If Najib wants to be successful in his GTP, he has to learn from Second Emperor, Lee Shi Meng(李世明) of Tang dynasty（观看贞锺长歌电视剧.Put aside two third of government servant out of service, and just pay them Gaji Buta until they retire,can he ??????

Where was India and China or even Vietnam when we were at the hive of 8%~10% growth? Its the corruption & cronysm that brought us down to the level now. Get rid of corruption & cronysm, the country will regain its CLEAN and SUSTAIN prosperity.

It's very unlikely to achieve 8% annual growth. All we need is to look around the appalling economic, political, education conditions and FDI of the country to get the answer. There's no difference between Najib's leadership from that of his predecessors.

Tan Cairong said...Fong Chan Onn gives an insightful look into the issues in today's (7 Feb.) Star. A long time that we have a politician that talks sense. It's our curse that such people can't last long in position of influence, and people in position that can make a difference are not those who read newspapers, and less so to listen to people who are eying their own position of power. To raise income level, productivity must first go up. Before the half million highly qualified Malaysian professionals mentioned can contribute to pull the country up the ladder, we have to first address how to raise the productivity of our 1.2 million civil servants to enable that to happen.

My associates in Singapore wants to start a manufacturing facility.They reviewed, Johore Iskander and Batam.Looking at the Social,Economic and Political factors in these 2 countries, they have decided to go to Batam.Batam have seen the worst and getting better but Malaysia is getting worst from better.The bubble is building up from all sides and no one knows how much bigger or when it will burst!

Khoo,to add to my comment anon 9.02pm,the denial and the condemnation of the DPM on Perc's honest write out will only aggravate Malaysia's destability! Perc is a very well respected organisation globally.

Khoo Kay Peng

Khoo Kay Peng

About Me

Kay Peng is a strategy and management consultant and a political analyst. He holds a bachelor degree in Economics from the University of Malaya and a master of arts degree in International Relations from the University of Warwick. He was a Kuok Foundation and a British Chevening scholar.

For more information on what he does; please visit www.i3mgroup.com

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